Re­port: Dell may sell it­self to VMware

It al­ready con­trols firm in what would amount to re­verse-merger.

Austin American-Statesman - - BUSINESS - By Se­bas­tian Her­rera sher­rera@states­ Dell

Round Rock-based Dell Tech­nolo­gies is con­sid­er­ing a sale to VMware, a pub­licly held cloud com­put­ing firm that Dell al­ready con­trols, ac­cord­ing to me­dia re­ports Mon­day.

News of the po­ten­tial sale — which would ef­fec­tively be a re­verse-merger — comes af­ter ear­lier re­ports that pri­vately held Dell is weigh­ing a va­ri­ety of op­tions, Those in­clude an ini­tial public of­fer­ing of stock or pur­chas­ing the rest of VMware, as it looks to pay off the huge debt it took on in its ac­qui­si­tion of data stor­age com­pany EMC Corp. in 2013.

CNBC, which first re­ported the po­ten­tial sale on Mon­day, said the in­for­ma­tion came from peo­ple fa­mil­iar with the mat­ter who asked not to be named be­cause the dis­cus­sions are pri­vate.

With a sale to VMware, Dell could again be­come a pub­licly traded com­pany with­out hav­ing to pass through the more com­plex process of an IPO, said Rob En­derle, an an­a­lyst with Ore­gon-based En­derle Group.

“It’s a cre­ative way to solve a num­ber of prob­lems,” En­derle said.

Dell Tech­nolo­gies founder and CEO Michael Dell “would ba­si­cally be sell­ing the com­pany to it­self,” En­derle said. “It’s much more con­trolled than an IPO. With the IPO, you take a huge gam­ble with what is hap­pen­ing with the mar­ket. You don’t con­trol the buy­ers. This could be cheaper and faster, and you could still re­name the com­pany Dell.”

By mov­ing for­ward with a sale, En­derle said, in­vestors could still gain a re­turn on their in­vest­ment be­cause VMware could is­sue Dell shares pub­licly.

In­vestors, how­ever, would likely see a larger re­turn from an IPO since the process usu­ally gen­er­ates buzz for a com­pany and ini­tially re­sults in a bump in share prices, En­derle said.

“Ma­jor in­vestors would pre­fer more money,” he said. “There’s a cer­tain feed­ing frenzy with an IPO.”


Michael Dell could take his com­pany public again with­out an IPO.

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